- standard established by the National Association of Realtors( Nar) to gauge the financial ability of consumers to buy a home a reading of 100 means a family learning the national medium home income reported by the Census Bureau can qualify for a mortgage on a typical medium-priced existing single-family home and index above 100 signifies that a family earning the median income more than qualifies for a mortgage loan on a median priced home and suming a 20% down payment
- there for an increase in the 44 debility index shows that a family is more able to afford the median price home the prevailing mortgage interest rate is the effective rate on loans closed on existing homes from the federal Housing Finance Agency for the United States and 8sn Associates Financial Publishers for various reasons regions the mortgage is based on an 80% loan 20% down payment and a qualifying ratio of 25% meaning that 25% of the bars gross monthly income will be needed to cover housing costs including the mortgage the 25% qualifying ratio covers expected principal and interest payments but does not cover taxes and insurance
- there are three different types of Indus has calculated bynar the fix rate index is based on the current effective interest rate on a 30-year fixed-rate mortgage
- the adjustable-rate index is calculated using the prevailing effective interest rate on a justable rate mortgages on fixed in adjustable-rate mortgages Wade by the relative proportion of fix in adjustable-rate loans close on existing homes
- Nar also calculate a first-time home buyers affordability index which recognizes the special characteristics of first-time home buyers and the homes they purchase
- the group most likely to purchase a first home consist of a young printer family with a head of household age 25 to 44 and a lower medium income then overall population this index assumes a 10% down payment and adds one quarter of a percentage to the mortgage rate for the required private mortgage insurance the first time home is calculated a 85% of the median price of all existing homes purchase some Economist maintain that everyone Point increase in the home mortgage interest rate is 300000 fewer home sales
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